Regulation of the property management industry took a significant step forward, with the government announcing the proposed framework and timeframe for implementing parameters to which the industry would be regulated.
Although the announcement was very much welcomed, regulation is not yet a done deal. At The Property Management Conference 2022 held in Wellington in November, a political panel consisting of Labour Housing Minister, Hon. Dr Megan Woods, National Housing Spokesperson, Chris Bishop, ACT Deputy Leader, Brooke van Veldon and Green Party MP Chloe Swarbrick discussed many issues facing our industry, tenants, and landlords alike.
It did not take long for the topic to turn to regulation and all members of the panel shared their views. Everyone knew the long-held opinions of Labour and Greens, who have been promoting and promising regulation for some time. However, it was interesting to get the views of both National and ACT.
Unsurprisingly, ACT was opposed to regulation. The view of van Veldon was that there is too much regulation and government interference in our lives. The views of Chris Bishop and National are critical as to whether regulation is needed. Bishops’ comments reinforced there is no certainty that National will support this. His view was like that of van Veldon, believing an already bloated public sector needed to be trimmed rather than added to.
Bishop promised that National would review the bill, and if they felt it was necessary, then they would support this. However, his body language suggested that they had more pressing matters to deal with, such as inflation, the cost-of-living crisis and getting more homes built.
Looking at the timeframe for regulation and the duration to simply pass through the House of Representatives, there is no guarantee regulation will eventuate. If National and ACT form a government next year, which is looking increasingly plausible, there is every possibility that the bill to regulate the property management industry will be thrown out. The Real Estate Institute of New Zealand (REINZ) needs to turn its attention to lobbying the National party as to the importance of regulation.
Many within the industry have been arguing that regulation is long overdue, and we now have a basic understanding as to what we anticipate this will look like.
- The Ministry of Housing and Urban Development will act as the regulatory steward to the property management sector.
- A guiding regulatory framework and code of conduct will be implemented.
- The Real Estate Authority (REA) will be responsible for the licensing of property managers and their agencies***.
- Individuals who work in the industry must be ‘a fit and proper person’.
- Non-interest-bearing trust accounts and annual audits of accounts will become compulsory.
- Compulsory continued professional development and training framework will be developed***.
- The REA will also front the disciplinary framework and Tribunal.
- Fines and penalties can be imposed on agencies and individuals who breach the regulatory framework.
***Similar to real estate salespeople
Many may wonder why regulating our industry is so important. An argument against regulation is that it will simply add more cost to companies, and those costs will be passed from landlords to tenants. I do not share these views. Property management as an industry is in its infancy, and regulation will increase the professionalism and quality of the products and services we offer.
It will also mean that companies will no longer be prepared to take on risks by managing non-compliant properties. The fear of losing their licence to operate will just be too great to make this risk worthwhile. This will lead to landlords improving their product, and in turn, will benefit tenants by increasing the pool of warm, dry, and safe homes.
One impact of regulation could be a consolidation of the property management industry as many smaller operators decide to sell up. The work involved in becoming regulated will be too much for them. An industry with fewer companies managing much bigger portfolios will be a likely outcome.
Overall, industry regulation will be positive for those working in the industry, consumers of our service and, our end users, valued tenants – I welcome the change ahead, and it can’t come too soon!
